There are a few questions we hear often at our Lakehurst, NJ-area Subaru dealership. What is gap insurance? When do I use it? And how do I know if gap insurance is a worthy investment?
What is gap insurance?
Gap insurance is used to help you to cover the bridge between your car’s actual value and what you owe on your vehicle. That way, you aren’t left covering your negative equity in case of an accident.
When do I use it?
Whenever you are faced with a total loss on your vehicle, gap insurance comes into play. If you get in an accident and the damage is so high your vehicle isn’t worth repairing, that’s considered a total loss. Once your accident occurs, your insurance agent will give you a check that is equal to your car’s current value, not the amount you paid for it. You are still responsible for paying the remainder of your loan to your financial institution. If there is a big difference between the two, gap insurance helps cover the difference.
How do I know if it’s worth the investment?
There are a few types of buyers that are prime candidates for gap insurance. Car buyers who buy an expensive vehicle, pay a low down payment, or finance their vehicle for an extended period of time should consider gap insurance, because they are more likely to end up upside-down on their loan.
Our Subaru finance center can help you determine if you’re a good candidate for gap insurance while our experts walk you through your financing options.
Want to know more? Reach out to Lester Glenn Subaru at 888-785-0675 with your questions. Or, come by and see us. We’re happy to help!